Cashing In On Coupons

Nearly everyone at some point has received envelopes full of coupons stuffed in their mailbox. And how about that batch that always falls from the Sunday newspaper? What many people may consider “junk mail” is actually a big business–direct marketing via coupons.

Now that marketing has become more science than sales, couponing is evolving into an effective means of enticing consumers to sample products. The effectiveness of coupons is what led Andrew Morrison to launch Nia Direct Inc., a New York City-based direct response marketing company, in 1988. Through its Nia’s Coupons For Savings, Morrison selectively targets 1 million African American households twice a year with a variety of consumer offerings, from food products to health and beauty aids to life insurance and travel club memberships.

After eight years in the business, the 31-year-old Morrison’s efforts are starting to pay off. His fledgling start-up has grown into a $2.5 million enterprise that has helped establish the viability of direct marketing to black consumers.

In 1995, direct marketing, which includes couponing, was responsible for over $1 trillion in sales, according to the Direct Marketing Association (DMA). Of that, marketing efforts directed to consumers accounted for $594.4 billion last year, and will climb to $841.2 billion by the turn of the century.

For years, the little known but highly profitable direct (mail) response business has been dominated by majority-owned media companies, such as industry giants Cox Target Media (a subsidiary of Cox Communications Inc.) and Rupert Murdoch’s News America Corp.

Morrison’s five-employee firm, located in New York’s Wall Street area, is one of few minority firms in the business that does coupons. His firm has grown from servicing small local businesses to heavyweight clients such as Kraft Foods, Exxon Travel Club, Gerber Life, Beneficial Life Insurance and Columbia House. Nia Direct can also count several magazines, including Vibe, Heart & Soul and BLACK ENTERPRISE, among its roster of current and former clients. Morrison handles all the creative design of the coupons via computer.

“Nia works because Morrison has been able to get a really good ethnic mailing file,” says Pete Burgess, CEO of COX Direct Inc. in Largo, Florida. “We’d love to have his file. You have magazines that target black consumers but they won’t sell their lists to us. Retailers want to reach African Americans, but we don’t have the base,” he explains.

As direct marketing becomes more segmented and ethnic markets more sought out, Morrison’s challenge will be to expand his business, while protecting his niche from larger competitors. The objective is to tap into new markets without sacrificing Nia’s initial customer base.

Besides coupons, Morrison now provides direct response consulting services and database development. Looking to the future, he wants to develop software that will allow consumers to do electronically what must now be done by mail.

CHANGING THE FACE OF AMERICAN CONSUMERS
Depending on the consumer market an advertiser wants to reach, direct mail can target specific households and segments of those households through geographic, demographic and psychographic profiles. Through selective packaging, companies can offer the same